MVB Financial Corp. Reports Second Quarter 2017 Earnings

FAIRMONT, W.Va., July 31, 2017 /PRNewswire/ -- MVB Financial Corp. (OTC Markets Group OTCQB: MVBF) and its subsidiaries - MVB Bank and MVB Mortgage (collectively "MVB") - reported total net income of $2.3 million or $0.21 per share basic and $0.20 per share diluted for the three months ended June 30, 2017, compared to $2.5 million or $0.27 per share basic and $0.25 per share diluted for the three months ended June 30, 2016, excluding discontinued operations.

Approximately 1.9 million shares of the Company's common stock was issued from a capital raise completed in December 2016 and 434,783 shares of the Company's common stock was issued from a rights offering completed in April 2017. The $0.06 decrease in basic earnings per share for the three months ended June 30, 2017, compared to the same time period in 2016, resulted from the additional issued shares as year-over-year net income available to common shareholders, excluding discontinued operations, remained flat.

"This sale created outstanding shares and is reflected in a short-term, negative impact on earnings per share; however, this strategic sale will help drive value for the long-term and will add liquidity to MVB stock," said Larry F. Mazza, CEO & President of MVB Financial Corp.

"MVB Mortgage is feeling the effects of two critical happenings at the end of 2016. After the election, mortgage rates spiked; but, those rates have since fallen to lower levels to encourage mortgage volume. The mortgage volume declined in the fourth quarter of 2016, but has since picked up very strong momentum and looks promising for the rest of 2017."

SECOND QUARTER 2017 HIGHLIGHTS

• Net interest income of $10.9 million increased $588 thousand, or 5.7% from March 31, 2017, and $152 thousand, or 1.4% from the second quarter ended June 30, 2016.
• Total assets continue to steadily grow and reached $1.5 billion as of June 30, 2017.
• Loans of $1.1 billion as of June 30, 2017 increased $25.6 million, or 2.4% from March 31, 2017, and $14.9 million, or 1.4% from June 30, 2016, despite a decrease in commercial real estate concentration levels, from 382% at June 30, 2016, to 307% at March 31, 2017, and 306% at June 30, 2017.
• Strong credit quality continued with non-performing loans to total loans of 0.46% and annualized net loan charge-offs to total loans of 0.05% at June 30, 2017.

As previously announced, MVB Bank opened its third Morgantown, West Virginia, branch banking location and its first branch banking location in Leesburg, Virginia. The new Morgantown branch, located at 51 Donahue Drive, Suite 115, and the new Leesburg branch, located at 106 Harrison Street SE, Suite 100, both feature automated interactive teller systems ("AIT"). Five MVB Bank locations currently utilize the state-of-the-art AIT technology, which increases client accessibility and allows for extended hours of operation and enhanced security while keeping the human touch.  The Bank is moving into its third year of utilizing this new banking technology.

"Not burdened with outdated legacy branches in declining markets and counter to bank branching trends, MVB Bank is positioned to strategically pinpoint well-performing markets for new branch locations. Our two newest branches, in Morgantown, West Virginia and Leesburg, Virginia, have expanded our footprint in two of the best growth markets in the Tri-State region," Mazza said.

In 2016, management focused on diversifying its lending to reduce commercial real estate concentration levels. This coupled with higher than usual loan payoffs, reflected a smaller total loan growth than anticipated for the quarter. Loans as of June 30, 2017 totaled $1.102 billion, an increase of $25.6 million, or 2.4% when compared to loan balances at March 31, 2017. In comparison to the June 30, 2016 loan balance of $1.088 billion, loans increased $14.9 million, or 1.4%. Commercial loans increased $29.0 million from March 31, 2017, while still maintaining an appropriate level of commercial real estate concentration.

Deposits as of June 30, 2017 totaled $1.100 billion, a decrease of $36.9 million, or 3.2% when compared to deposit balances at March 31, 2017. In comparison to the June 30, 2016 deposit balance of $1.067 billion, deposits increased $32.4 million, or 3.0%. Noninterest bearing deposit balances have steadily improved and reached $121.4 million as of June 30, 2017, an increase of $2.1 million since March 31, 2017 and $25.0 million since June 30, 2016. The linked quarter decrease in deposit balances at June 30, 2017 is primarily attributable to a $26.6 million seasonal decrease in public fund deposits and the maturity of $19.4 million in non-brokered internet certificates of deposit that management deliberately let mature due to the growth in other deposits.

Net interest income for the second quarter of 2017 was $10.9 million, an increase of $588 thousand, or 5.7% from March 31, 2017 and $152 thousand, or 1.4% from the second quarter ended June 30, 2016. Net interest margin for the second quarter of 2017 was 3.31%, an increase of 12 basis points from March 31, 2017 and 17 basis points from the second quarter ended June 30, 2016.

Provision for loan losses for the second quarter of 2017 was $523 thousand, an increase of $5 thousand, or 1.0% from  March 31, 2017 and a decrease of $752 thousand, or 59% from the second quarter ended June 30, 2016. The decrease in provision for loan loss is most attributable to a significantly lower level of charge-offs, with the overall decrease also being impacted by increased loan volume and variations in historical loss rates.

Through continued effective collection and successful workout efforts, the Company's nonperforming loans to total loans was 0.46% as of June 30, 2017, a decrease of 13 basis points from March 31, 2017 and 29 basis points from June 30, 2016. In addition, the Company's annualized net loan charge-offs to total loans was 0.05% as of June 30, 2017, a decrease of 4 basis points from March 31, 2017 and 18 basis points from June 30, 2016.

Noninterest income for the second quarter of 2017 was $11.6 million, an increase of $2.7 million, or 31.1% from March 31, 2017 and a decrease of $434 thousand, or 3.6% from the second quarter ended June 30, 2016. The linked quarter increase was primarily the result of a $3.0 million increase in gain on derivatives. The year over year decrease was primarily the result of a $445 thousand decrease in mortgage fee income. MVB Mortgage noninterest income for the second quarter of 2017 was $10.1 million, an increase of $2.3 million, or 29.1% from March 31, 2017 and a decrease of $833 thousand, or 7.6% from the second quarter ended June 30, 2016.

Noninterest expense for the second quarter of 2017 was $18.5 million, an increase of $2.2 million, or 13.4% from March 31, 2017 and $747 thousand, or 4.2% from the second quarter ended June 30, 2016. The linked quarter increase was primarily driven by an increase in salaries and employee benefits related to closed mortgage volume, which increased 31.2%. The year over year increase was primarily the result of higher data processing, travel and meals and entertainment expenses related to the Bank's core processing system conversion that was completed during the second quarter of 2017.

As previously announced, on May 17, 2017, MVB Financial Corp. declared a quarterly cash dividend of $0.025 per share to shareholders of record at the close of business on June 1, 2017, payable June 15, 2017. This was the second quarterly dividend for 2017 and was equal to the March 2017 payout of $0.025 per share. The cash dividend of $0.05 through the six months ended June 30, 2017, increased $0.01, or 25% compared to the six months ended June 30, 2016.

About MVB Financial Corp.

MVB is a financial holding company headquartered in Fairmont, W.Va. Through its subsidiary, MVB Bank, Inc., and the bank's subsidiary, MVB Mortgage, the company provides financial services to individuals and corporate clients in the Mid-Atlantic region.

The OTCQB is a market tier operated by the OTC Market Group Inc., for over-the-counter traded companies that are current in their reporting with a U.S. regulator.

For more information, please visit ir.mvbbanking.com.

Forward-looking Statements

MVB Financial Corp. has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this Press Release. These forward-looking statements are based on current expectations about the future and subject to risks and uncertainties. Forward-looking statements include information concerning possible or assumed future results of operations of the Company and its subsidiaries. When words such as "believes," "expects," "anticipates," "may," or similar expressions occur in this Earnings Release, the Company is making forward-looking statements. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in the forward-looking statements contained in this Earnings Release. Those factors include, but are not limited to: credit risk, changes in market interest rates, inability to achieve merger-related synergies, competition, economic downturn or recession, and government regulation and supervision. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov. Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements.

Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company's financial statements when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information in this announcement is subject to change.